Correlation Between Nasdaq 100 and Pacific Funds
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Pacific Funds at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nasdaq 100 and Pacific Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Pacific Funds Small Cap, you can compare the effects of market volatilities on Nasdaq 100 and Pacific Funds and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nasdaq 100 with a short position of Pacific Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Pacific Funds.
Diversification Opportunities for Nasdaq 100 and Pacific Funds
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nasdaq and Pacific is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Pacific Funds Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Small and Nasdaq 100 is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nasdaq 100 2x Strategy are associated (or correlated) with Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Small has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Pacific Funds go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Pacific Funds
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 2.06 times more return on investment than Pacific Funds. However, Nasdaq 100 is 2.06 times more volatile than Pacific Funds Small Cap. It trades about 0.11 of its potential returns per unit of risk. Pacific Funds Small Cap is currently generating about 0.01 per unit of risk. If you would invest 13,884 in Nasdaq 100 2x Strategy on September 12, 2024 and sell it today you would earn a total of 29,533 from holding Nasdaq 100 2x Strategy or generate 212.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 20.65% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Pacific Funds Small Cap
Performance |
| Timeline |
| Nasdaq 100 2x |
| Pacific Funds Small |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nasdaq 100 and Pacific Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Pacific Funds
The main advantage of trading using opposite Nasdaq 100 and Pacific Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Pacific Funds can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pacific Funds will offset losses from the drop in Pacific Funds' long position.| Nasdaq 100 vs. Ambrus Core Bond | Nasdaq 100 vs. Pace High Yield | Nasdaq 100 vs. Franklin High Yield | Nasdaq 100 vs. The National Tax Free |
| Pacific Funds vs. Investec Emerging Markets | Pacific Funds vs. Ashmore Emerging Markets | Pacific Funds vs. Nasdaq 100 2x Strategy | Pacific Funds vs. Franklin Emerging Market |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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